Glasgow engineering firm Weir Group (WEIR) falls 1.4% to £25 as Finnish rival Metso (MEO1V:HSX) confirms it has made an unsolicited approach.

Metso's statement appears to at least partially back up a report in The Times that Weir, which is focused on the oil and gas and mining sectors, will pay up to ?4 billion or ?30 a share as it looks to expand its industrial pumps and valves offering. This would make it a very material looking acquisition when set against Weir's current market cap of £5.3 billion. An unnamed source suggests talks have been ongoing for some time but Metso denies this, though it does acknowledge it is considering the proposal and gains 14.1% to $27.07 on the Helsinki Stock Exchange.

Earlier this month Metso spun off its paper machine arm Valmet - essentially halving the business in size and potentially making it easier to swallow for any prospective acquirer. A complicating factor is the 11% stake held by the Finnish government and this could be an obstacle to pushing the deal through. The transaction would lead to a significant increase in Weir's mining exposure - with mining and construction accounting for 78% of Metso's business in 2013.

Last year the group saw sales fall 10% to ?3.9 billion but earnings before interest tax and amortisation (EBITA) was up from ?486 million to ?496 million. Its order book stands at ?2 billion.

UPDATED 10.40am: Weir has now confirmed its move on Metso, saying the proposed deal is an all-share merger. It says: 'The Board of Weir believes that there is a strong strategic rationale for bringing the two companies together which would offer the opportunity for significant efficiencies and synergies, creating significant value for all shareholders. Weir envisages that the merged entity would be listed on both the London and Helsinki Stock Exchanges.'

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